Be positive, Souter tells transport providers

Stagecoach chairman acknowledges the challenges, but tells bus audience: ‘There is everything to play for here. These are fantastic businesses’

Sir Brian Souter was speaking at the CPT Scottish Conference in Ayrshire last week

Sir Brian Souter has urged his transport industry colleagues to be positive about the future, declaring that “these companies will come back into fashion”.

Addressing the CPT Scottish Conference in Ayrshire last week, the Stagecoach chairman outlined three major challenges to the future of the bus industry: internet sales, home working
and digital disruptors like Uber. But he urged his transport industry colleagues to be bold and expand their businesses.

“Honestly, I know you think I’m nuts, but this is a great time for expansion,” he told delegates.

Souter built his fortune in the transport sector after co-founding Stagecoach, but his personal investment portfolio is diverse. He is currently selling off his private equity investments in tech businesses for “unbelievable” prices, netting £6m from a £120,000 investment in Edinburgh-based Skyscanner, the air travel website. But each night the Stagecoach share price brings him back down to earth.

Despite this, Souter predicted that investors will eventually rediscover the value of businesses like Stagecoach, and he
contrasted the “gentle decline” that has returned to the transport sector with plummeting sales of newspapers.

There is everything to play for here. These are fantastic businesses

“We don’t have a problem of that scale as an industry … There is everything to play for here,” he said. “These are fantastic businesses and we need to rewrite the story as far as these quoted companies are concerned.”

Souter continued: “We need to be looking at it. If the private equity boys want to do a deal with you then maybe it’s time to think about doing a deal with them.You will never see the companies as cheap as they are just now.

“And these companies will come back into fashion as trends change again, as the digital revolution explodes and all the fallout that comes from it. We have seen it before with the internet boom and all the rest of it.”

Souter called on his industry colleagues to show entrepreneurial flair and invent new products. He praised local council-owned Lothian for starting up a coach operation and doing tours “because there is an enormous market for the tourism in Scotland that we are really not capitalising on at this point in time”.

While he cited digital disruptors as posing a challenge to the bus industry he said their impact would be limited.

“I’m not sure the Uber story is sustainable,” he said. “The last set of accounts they had their losses of 25%. So if you are an Uber user, suck it up, get as much of this as you can. Some private equity investor is giving you 25 pence for every pound you spend. Make the most of it because it is not sustainable. That is for sure.”

Internet shopping and home working are bigger threats, according to Souter. He predicted that Amazon would eventually have to pay a fair share of taxation and he urged bus operators to forge alliances with High Street retailers. Meanwhile, he urged his audience to watch London closely to understand the impact of home working on travel behaviour.